Why Use SBA 7(a) Loans?

SBA 7(a) Loans are long term, government backed, guaranteed lending for working capital, inventory, equipment, and real estate use for your business. A 7(a) loan, unlike a typical commercial bank loan, can get you up to 90% financing of your total project cost. This is the first and most important benefit -- by using a SBA 7(a) loan you can free up valuable capital for operational uses in your business. 7(a) loans offer a long term financing structure that are typically floating rates over the life of the loan.

SBA 7(a) Benefits For Borrowers

Offers more flexibility for loans to be used for working capital, intangible assets, and inventory

The term for a 7(a) can be determined by maximum term for the assets class comprising the largest use of proceeds, with no call provisions or balloons. Example: $500,000 to buy a building, $350,000 for equipment would qualify for a 25 year term.

Only a 3-year prepayment penalty for loans 15 years or more and no prepayment penalty for loans less than 15 years

Significantly lower injection of equity

Increased available capital

SBA 504 Benefits For Lenders

1st Lien position with SBA guaranty for 75% of the loan

Additional income opportunities in secondary market

Minimal equity injection requirements helps lenders compete for more business

Eligible Use of Funds

Working Capital

Business Acquisition

Construction

Real Estate

Equipment

Inventory

Interest Rate and Terms

Floating Rate -- based on the WSJ Prime Rate

Up to a 5-year term for real estate

Up to a 10-year term for working capital, inventory, and equipment

Borrower's Injection

A minimum of 10% equity for working capital, inventory, and real estate

For business acquisitions, if intangible assets are $250,000 or greater, the injection must be 25% to be processed through Preferred Lender procedures